Look toward the future; create a leadership succession agenda

In my last article, I wrote about leadership qualities. One of the qualities I did not mention was the ability to delegate.

I consider that ability to be a form of leveraging. By sharing decision-making responsibility and authority, the competent leader leverages his or her time, span of control and ability to generate results.

One of the benefits of this practice is that it creates a line of succession. Our firm has worked with hundreds of companies--of every type, complexity and size--that are seeking to sell themselves to new owners. The most common reason is that there is no succession plan in place.

In many instances, the owners and managers assumed a son or daughter would be the heir. But often, children express no interest in continuing the family legacy.

Also, many organizations are so engrossed in the day-to-day rough and tumble of competition that no thought at all is given to succession planning.

It should be no surprise then, to see that 70 percent of family-owned businesses do not make it to the second generation, and only 13 percent continue to the third generation.

This is quite a problem, given that 90 percent of all U.S. businesses are family-owned and controlled, according to the U.S. Small Business Administration.

These businesses account for 65 percent of all wages paid, and generate 50 percent of the country's gross national product.

More than 33 percent of family-business owners are 61 years old, or older, and my guess is that this percentage is even higher in the Capital Region.

In order to prepare for the future, a business owner or manager must take a proactive stance.

Here are some steps to take:

? Revise your tried and true business plan--The "glue" to every successful business must be reviewed and updated with a particular emphasis on management and ownership succession.

A review should include a detailed inventory of the talent currently available, including factors such as years with the company; job descriptions; experience in the job and in related positions; and education.

? Make a comprehensive review of the company's organizational chart--You might want to try an interesting exercise. Write out what your company should look like in five years, including a proposed organizational chart, and compare that to your current structure. See where the "gaps" are.

? Identify a likely succession candidate--Focus on his or her strengths and weaknesses. Human nature being what it is, employees have no problems using their strengths but will often go to great lengths to avoid exposing their weaknesses.

On-the-job training, education and special assignments designed to overcome these weaknesses should be introduced into the candidate's career plan.

? Do a lot of communicating and evaluating--Formal reviews and informal conversations can help guide prospective candidates in the "right" direction.

It amazes me how infrequently this review "tool" is utilized, until I remember that most of us avoid any type of criticism or conflict--we often choose to be "liked" instead of respected.

? Get outside consultation--This is critical. Professional advisers, including your attorney, accountant and banker, should be involved in the technical aspects of succession. This "kitchen cabinet" often can provide operational input. Moreover, resources such as seminars, newsletters and related sources of expertise can be obtained from the professional association representing your business.

Running your own company can be fun--it will certainly be challenging. Hopefully, it will be rewarding. But, despite our best efforts, none of us can do it forever. Protect your future and your firm's future with a proactive succession plan.

Patten is a partner in Patten, Vergis & Associates LLC of Albany, a business acquisition, sales and financing consulting firm.